Growth Stocks
Although growth stock picks can be highly volatile, they can make good long-term investments. They may be well-known stars or quiet gems, but they do share one common attribute—they are growing at a higher-than-average rate within their industry, or within the market as a whole, and could keep growing for years or decades.
And keep in mind that we focus on growth stocks, which have a good long-term history and favourable prospects. We downplay momentum stocks that tend to attract many investors simply because they are moving faster than the market averages, but are liable to fall sharply when their momentum fades.
There’s room for growth stock investing in your portfolio, but make sure you follow our TSI Network three-part Successful Investor strategy for your overall portfolio:
- Invest mainly in well-established companies;
- Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; Consumer; Finance; Utilities);
- Downplay or avoid stocks in the broker/media limelight.
Make better stock picks when you read this FREE Special Report, Canadian Growth Stocks: WestJet Stock, RioCan Stock and More.
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Growth Stocks Library Archives
TRUE ENERGY TRUST $0.84 (Toronto symbol TUI.UN; SI Rating: Speculative) (403-264-8875; www.trueenergy.ab.ca; Units outstanding: 78.5 million; Market cap: $65.9 million) plans to convert itself into a conventional corporation by late October. The trust’s long-term debt now stands at $110 million. That’s still a high 166.9% of its market cap. But the trust reported cash flow of $10.5 million, or $0.14 a unit, in the latest quarter. This will let it keep paying down debt while maintaining production. True suspended its monthly distributions earlier this year because of falling energy prices and difficult credit markets, so the conversion won’t affect its payout to unitholders....
FAIRFAX FINANCIAL HOLDINGS $396.80 (Toronto symbol FFH: SI Rating: Average) (416-367-2612; www.fairfax.ca; Shares outstanding: 19.7 million; Market cap: $7.8 billion) plans to buy the 27.4% of Odyssey Re Holdings Corp. (New York symbol ORH) that it doesn’t already own for $960 million U.S. Odyssey Re is a major worldwide underwriter of property and casualty reinsurance. Reinsurers sell insurance to insurance companies. This lets those companies offset large risks. To pay for the purchase, Fairfax will raise $1 billion U.S. by selling 2.9 million shares at $347.00 U.S. a share....
GARMIN $37.23 (Nasdaq symbol GRMN; SI Rating: Speculative) (913-397-8200; www.garmin.com; Shares outstanding: 200.5 million; Market cap: $7.5 billion) is launching its nuvifone G60 smartphone later this year. The company recently announced that AT&T will be the wireless carrier. AT&T also carries Apple’s iPhone. Garmin will make the nuvifone in partnership with Taiwanese PC maker Asustek. The nuvifone faces considerable competition from established market leaders like Nokia, Research In Motion’s BlackBerry and Apple’s iPhone. But Garmin’s smartphone, which runs on the Linux operating system, will build on its leadership in the GPS field. For example, it offers turn-by-turn navigation, and has a camera that automatically tags images with the exact latitude and longitude of where the picture was taken. The phone will also include Google’s local-search capabilities. That lets nuvifone users search continuously updated Google listings for restaurants, lodging, ATMs, gas stations and so on. Search results are based on the user’s location, and are sorted by geographic relevance....
REITMANS (CANADA) LTD. $16.09 (Toronto symbol RET.A; SI Rating: Extra Risk) (514-384-1140; www.reitmans.com; Shares outstanding: 70.8 million; Market cap: $1.1 billion) owns 971 women’s clothing stores across Canada. The chain consists of 368 Reitmans, 164 Smart Set, 162 Penningtons, 123 Addition Elle, 76 Thyme Maternity, 62 RW & Co. and 16 Cassis stores. Reitmans continues to monitor its regional markets, and open and close stores as necessary. In the three months ended August 1, 2009, Reitmans’ revenue fell 1.3%, to $286.1 million from $289.5 million a year earlier. Same-store sales declined 2.2%. Earnings fell 25.3%, to $26.4 million, or $0.38 a share, from $35.4 million, or $0.50 a share....
KRAFT FOODS INC., $26.10, New York symbol KFT, launched a hostile takeover bid this week for U.K.-based Cadbury plc (New York symbol CBY), a leading maker of confectioneries, including chocolate, candy and gum. Kraft’s bid is worth roughly $16.8 billion, which is equal to 44% of its market cap. The offer consists of roughly 60% stock and 40% cash. As of June 30, 2009, Kraft held cash of just $1.7 billion, or $1.17 a share, so it will have to significantly add to its $18.6-billion long-term debt to complete this takeover....
FAIRFAX FINANCIAL HOLDINGS, $371.00, symbol FFH on Toronto, plans to buy the 27.4% of Odyssey Re Holdings Corp. (New York symbol ORH) that it doesn’t already own for $960 million U.S. Odyssey Re is a major worldwide underwriter of property and casualty reinsurance. Reinsurers sell insurance to insurance companies. This lets those companies offset large risks. To pay for the purchase, Fairfax will raise $1 billion U.S. by selling 2.9 million shares at $347.00 U.S. a share....
H&R BLOCK INC., $16.62, New York symbol HRB, lost $130.6 million in its first quarter, which ended July 31, 2009. That’s 1.7% higher than the $128.4 million it lost a year earlier. Earnings per share were unchanged, at $0.39. That’s a little worse than the $0.37-a-share loss that analysts were expecting. Revenue rose 1.3%, to $275.5 million from $271.9 million. H&R Block gets about 75% of its revenue from its tax-preparation business. As a result, it earns most of its money during its fourth quarter, which includes the April 15 income-tax-filing deadline. The company typically loses money in its first and second quarters....
GREY ISLAND SYSTEMS INTERNATIONAL $0.34, symbol GIS on Toronto, has renegotiated the terms of the friendly takeover offer it received from WebTech Wireless (symbol WEW on Toronto) last month. WebTech’s main product is its Quadrant fleet-management system, which lets dispatchers know where their vehicles are at any time. Quadrant is used in over 45 countries. Under the new offer, Grey Island shareholders will get 0.35 of a WebTech share for each of their Grey Island shares. That’s up 16.7% from 0.30 of a WebTech share under the old deal. Based on WebTech’s trading price, the new offer translates to $0.37 per Grey Island share....
THE BOEING CO., $51.04, New York symbol BA, rose 11% this week after the company said that its new 787 Dreamliner passenger jet would make its first test flight by the end of this year. Last June, Boeing had to suspend test flights after it discovered structural weakness where the plane’s wings connect to its body. The company now believes that it has fixed this problem. Boeing is unable to sell the first three Dreamliners it built because it made so many modifications to them in the design and testing process. As a result, it will classify their construction costs as a research expense. This will lower its third-quarter earnings by $2.21 a share. To put this in context, Boeing earned $1.41 a share in the second quarter of 2009. However, the charge is an accounting adjustment and will not affect Boeing’s cash flow or cash balances....
AEROPOSTALE INC., $39.70, symbol ARO on New York, reported higher sales and profits this week. In the three months ended August 1, 2009, Aeropostale’s same-store sales rose 12%, and online sales jumped 49%, to $15.8 million from $10.6 million. The company’s earnings jumped 83.3%, to $38.6 million, or $0.57 a share, from $21.1 million, or $0.31 a share. Revenue rose 20.1%, to $453 million from $377.1 million a year earlier. Aeropostale’s wide variety of clothing, low prices and aggressive promotions were the main reasons behind the company’s strong results....